Private Criminal Prosecutions in Financial Remedies Cases

Andrzej Bojarski, Kate Tompkins and Cameron Crowe, barristers at 36 Bedford Row, combine their expertise in unravelling complex financial arrangements on divorce and prosecuting serious crimes to consider whether the criminal courts might offer opportunities for a spouse in an exceptional case when all conventional options in the family courts have been exhausted.

The use of private criminal prosecution has begun to be used more regularly in commercial disputes as an adjunct or as an alternative to conventional civil litigation. For example, last year a private prosecution under unfair trading regulations was used against an internet car trading company in order to protect the legitimate commercial interests of the prosecuting party1.

In a few exceptional financial remedies cases there may be scope for private prosecutions to be brought against the alleged associates of a spouse who has sought to evade the claims of the other spouse by foul means. Associates who assist a spouse to side-step the conventional course of justice may have committed a criminal conspiracy. In appropriate cases, family lawyers may wish to consider the scope for adopting some of the tactics utilised by their commercial litigation colleagues.

Why would a wronged spouse choose to turn to the criminal courts? There are various potential reasons:

(1) To seek to punish those who have done wrong. However, one would need to have deep pockets and enormous emotional resources to launch a private prosecution motivated by only by vengeance or an altruistic pursuit of the public interest. There is likely to be a more material purpose to the prosecution.

(2) To apply very direct and intense personal pressure upon the other party and his or her associates. This may be in the hope of improving a negotiating position or to create cracks in the conspiracy so that one of the associates may make admissions or give evidence in favour of the prosecuting spouse. By effectively turning 'Queen's Evidence' such an associate may unlock the door to locating hidden assets and unravelling a web of deceit. This is perhaps the most likely motivating factor for a private prosecution in a case where the amount at stake is large and all conventional approaches appear to have reached a dead-end. However, there may be a fine line between bringing a legitimate prosecution and abusing the due process of the court or, worse still, committing blackmail.

(3) To reach those situated outside the jurisdiction. The arm of the criminal law is potentially longer and more effective at extending across international borders than more conventional civil remedies.

(4) To broaden the scope of the law to be applied. As discussed below, a criminal conspiracy may arise from the commission of highly technical regulatory offences. It may be possible to bring a criminal prosecution against a conspiring individual where no civil cause of action arises against him or her.

(5) Deterrence. In an ongoing case, to deter any other individuals from offering assistance to a spouse upon whom the forensic enquiry is inexorably closing in. The threat of criminal prosecution may effectively cause the movement of property to stop, or at least slow down. It is the ability of the criminal law to make an example of a wrongdoer in order to deter others which makes it a useful remedy in many of the commercial situations in which it is used, and it may serve a similar purpose in some extreme family cases.

(6) Compensation. Although the use of criminal confiscation proceedings or civil recovery proceedings under the Proceeds of Crime Act 2002 following a conviction may result in the confiscation of unlawfully obtained assets from those who hold them, these provisions provide little practical benefit to a private prosecutor (other than providing the satisfaction of seeing the fruits of a fraud removed from those who perpetrated it). The criminal court's broad discretionary powers to order compensation to be paid by those convicted to the person wronged by the crime, on the other hand, may be of much more practical benefit where the matrimonial assets have disappeared but those complicit in the dissipation of the assets have assets of their own.

This article does not seek to comment on the merits or otherwise of private prosecutions in any particular case. It simply seeks to provide some explanation of what the options may be in an exceptional case. Although there are reports of private prosecutions being considered in the context of some very difficult financial remedies cases, it is a course which comes with a number of very serious health warnings:

• The costs are likely to be very substantial. Although those costs may be recovered if the prosecution succeeds, they will be paid to the defendants in the event the prosecution fails.

• The technical difficulties of proving a case to the criminal standard are likely to be beyond the means of most litigants.

• Even a technically strong and meritorious prosecution may be stopped by the Director of Public Prosecutions on the basis of the public interest. Although such a step may be capable of being judicially reviewed, the DPP's discretion in the matter is a broad one. Where the prosecution has an international element and powers of extradition are invoked, the involvement of the DPP is inevitable.

What is Criminal Conspiracy?The definition of the offence of conspiracy is found in section 1 of the Criminal Law Act 1977:

(1) Subject to the following provisions of this Part of this Act, if a person agrees with any other person or persons that a course of conduct shall be pursued which, if the agreement is carried out in accordance with their intentions, either—

(a) will necessarily amount to or involve the commission of any offence or offences by one or more of the parties to the agreement, or

(b) would do so but for the existence of facts which render the commission of the offence or any of the offences impossible,

he is guilty of conspiracy to commit the offence or offences in question.

(2) Where liability for any offence may be incurred without knowledge on the part of the person committing it of any particular fact or circumstance necessary for the commission of the offence, a person shall nevertheless not be guilty of conspiracy to commit that offence by virtue of subsection (1) above unless he and at least one other party to the agreement intend or know that that fact or circumstance shall or will exist at the time when the conduct constituting the offence is to take place.

(4) In this Part of this Act "offence" means an offence triable in England and Wales2

The essence of conspiracy is the agreement between two or more people to commit a criminal offence or offences, albeit the conspirators who agree to pursue a course of conduct need not have the commission of a specific offence in mind. The knowledge of the law on the part of a conspirator is immaterial if what was agreed, on the facts known to them, did in fact amount to a criminal offence.

When two or more people agree to carry their criminal scheme into effect, the very plot is the criminal act itself, nothing need be done in pursuit of the agreement. Repentance by one or more parties to the agreement, lack of opportunity or failure to implement the agreed plan are all immaterial.

An agreement may amount to a conspiracy even if it contains some reservation, either express or implied. Whether it does depends largely on the form of the reservation. A substantial reservation may mean that the arrangement between the parties was a negotiation only, falling short of conspiracy.

An agreement is usually proved in criminal proceedings, in the absence of a physical written agreement, by inviting an inference to be drawn from the acts of the conspirators.

A conspiracy between a person in England and a person abroad to commit a crime in England is indictable in England. Equally, a conspiracy formed abroad to commit a crime in England is indictable in England even if no acts in furtherance of the conspiracy are committed within England. Family lawyers dealing with complex trust and company arrangements such as those considered in the litigation resulting in the Court of Appeal decision in Petrodel v Prest will immediately prick up their ears with interest at this. A conspiracy may exist between persons who have never seen nor corresponded with each other.

A company may be convicted of conspiracy. One person may be tried for conspiracy provided that he is charged with conspiring with others. The others may be unknown or deceased.

Due to the breadth of the definition of conspiracy extending to conspiring to commit 'any offence or offences', even the commission of offences based on regulatory or administrative provisions may give rise to the commission of the offence of conspiracy. This may have application within the facts of many complex family finance cases where evidence may arise as to the commission of acts which are criminal offences under company law, financial services legislation, money laundering regulations or other industry specific regulations bearing a criminal penalty, but not actionable in themselves.

The rubric on the front of every Form E warns the party completing the form that deliberately untruthful disclosure may amount to an offence under the Fraud Act 2006. Section 1 of the Act creates a single offence of fraud which can be committed in one of three ways. The species of fraud pursuant to ss. 2 and 3 are particularly pertinent in the context of the duty of full, frank and clear disclosure which arises in the context of financial remedy proceedings:

2 Fraud by false representation(1) A person is in breach of this section if he–

(a) dishonestly makes a false representation, and

(b) intends, by making the representation–

(i) to make a gain for himself or another, or

(ii) to cause loss to another or to expose another to a risk of loss.

(2) A representation is false if–

(a) it is untrue or misleading, and

(b) the person making it knows that it is, or might be, untrue or misleading.

(3) "Representation" means any representation as to fact or law, including a representation as to the state of mind of–

(a) the person making the representation, or

(b) any other person.

(4) A representation may be express or implied.

(5) For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).

3 Fraud by failing to disclose informationA person is in breach of this section if he–

(a) dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and

(b) intends, by failing to disclose the information–

(i) to make a gain for himself or another, or

(ii) to cause loss to another or to expose another to a risk of loss.

In addition to the statutory offence of fraud there is also the very wide-ranging common law offence of conspiracy to defraud, which is particularly useful in the most complex fraud cases where the core agreement to defraud can be stated quite simply even though the mechanisms by which that conspiracy is implemented is enormously complicated3. An agreement between a spouse and another person or persons to act in a way which enables the spouse to hide assets from the court and the other spouse may well amount to such a conspiracy. The Attorney General has issued guidance to prosecutors as to when it is appropriate to bring a prosecution for common law conspiracy to defraud4. Any private litigant should consider that guidance very carefully before taking steps to initiate a private prosecution.

Mounting a private prosecutionThe right to prosecute privately is governed by section 6 of the Prosecution of Offences Act 1985:

(1) Subject to subsection (2) below, nothing in this part shall preclude any person from instituting any criminal proceedings or conducting any criminal proceedings to which the Director's duty to take over the conduct of proceedings does not apply.

(2) Where criminal proceedings are instituted in circumstances in which the Director is not under a duty to take over their conduct, he may nevertheless do so at any stage.

In other words, the Director of Public Prosecutions will likely be consulted to see if he wishes to take over or stop the case. R v DPP, ex parte Duckenfield [2000] 1 WLR 55 held that the very premise of section 6(1) is that some cases will go to trial which the DPP himself would choose not to prosecute.

The DPP's duty is set out in section 3 of the Act. The DPP (via the CPS) has a duty to prosecute certain offences:

• Offences instituted by the police

• Offences instituted by an Immigration officer

• Extradition proceedings

• Any case where it appears to him that the importance/difficulty of it makes it appropriate for him to prosecute

• It is otherwise appropriate for proceedings to be instituted by him

The DPP has three choices when asked to take over a prosecution he has no duty to prosecute:

• Take over and continue the prosecution

• Take over and stop the case

• Allow the private prosecution to continue

The following factors weigh in favour of stopping the prosecution:

• Malicious prosecution without reasonable grounds

• The public prosecutor has already promised no prosecution or immunity

• The Defendant has already been cautioned

The following factors weigh in favour of continuing the prosecution:

• The case meets the evidential test in the Code for Prosecutors

• The case meets the public interest test in the Code for Prosecutors

• There is no particular reason to intervene (i.e. no disclosure issues, conducted by experienced counsel, original request made to public body to prosecute)

There may, perhaps inevitably, be mixed motives in prosecuting a case privately, but that does not prevent a case being brought as long as the actual conduct of the prosecution is in accordance with the requirements imposed upon public prosecutors (R (Dacre) v City of Westminster Magistrates' Court [2009] 1 WLR 2241).

The procedure for starting a prosecution is as follows:

1. The prosecuting party lays an information (Part 7 of the Criminal Procedure Rules 2012)

2. The Magistrates' clerk will grant the process as long as the offence is known in law, is in time and the court has jurisdiction. (N.B Section 4 of the Legal Services Act 2007 applies: Information must be laid by a qualified provider of legal services or by the named prosecutor: most probably the husband or wife in a divorce context: Media Protection Services v Crawford [2012] CTLC 82.)

3. The defendant will then be summonsed to court to answer the information (section 1 of the Magistrates' Courts Act 1980). It is possible, under the same section, to seek a warrant to arrest the defendant to bring him to court, but this should only be done in cases of a very serious nature

It is important to note that the prosecution of certain offences requires the consent of either the DPP or the Attorney General. Furthermore, the obtaining of an arrest warrant and the extradition to the United Kingdom of a defendant who is in another jurisdiction is likely to require highly specialised representation and the inevitable involvement of the Attorney General or the DPP. Where the defendant is outside the European Union, as is likely to be the situation in a case where a spouse's affairs involve offshore financial havens, the situation will be more complex still.

Even once these problems are all resolved, the trial will proceed according to the Criminal Procedure Rules 2012. The criminal laws of evidence will apply (something which many specialist family lawyers are poorly trained to deal with). Furthermore, the criminal standard of proof will apply.

Private prosecutions are not a matter to be undertaken lightly and are very unlikely to become routine. Nevertheless, there may be cases where it is an option worthy of consideration when all other avenues have ended in a dead end. Perhaps copies of Archbold will begin to appear on the book shelves of a few family lawyers. Every so often a family lawyer may knock on the door of a criminal practitioner colleague to discuss venturing into an entirely different forum in order to progress an intractable family dispute. As ever in family law, creative thinking may find a solution to an exceptional case when initially none seems to exist.

Andrzej Bojarski is a specialist in financial claims arising from marriage, civil partnership and cohabitation and is the Head of the Family Team at 36 Bedford Row. Kate Tompkins is a specialist in both family law and serious crime. Cameron Crowe specialises in consumer and commercial fraud. All are members of 36 Bedford Row.

3 The Law Commission had proposed the abolition of the common law offence to be replaced by the definition of fraud in the Fraud Act 2006. However, it was considered that the flexibility of the common law offence was an essential power for prosecutors to retain and so the common law offence continues to exist alongside the statutory offence.4www.gov.uk/use-of-the-common-law-offence-of-conspiracy-to-defraud--6